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Tuesday, April 15, 2008
Jon Sanders :: Townhall.com Columnist
Meet the New Big Energy, Same as the Old Big Energy
by Jon Sanders
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If you are a politician and you favor federal support for ethanol and other biofuels, would you kindly stop telling voters you care for the poor? We all expect candidates to tell some whoppers, but even so, that one is just plain unseemly.

By all means, examine the justifications for promoting biofuels. Conventional fuels are bad for the environment and contribute to global warming; oil prices are going through the roof; and we don't want to be held hostage to an energy cartel that keeps supply down to maximize profits.

It's one thing to speak wistfully about finding a fuel that will do all those things, but it is another thing entirely to discover it. The higher oil prices spike, the more entrepreneurs and independent investors will seek solutions. Why? Because there is simply too much money to be made by the person or company that figures it out. The profit motive is good; it impels people to search for solutions. Whether that solution is finding ways to tap into an American oil deposit that's larger than ANWR, or finding the next big energy break, or pushing for more nuclear power, or some combination, it doesn't matter -- just don't let government get in their way. Government is infinitely more capable of hampering the search for solutions than it is in finding one.

The last thing we need is our tax money used to promote a governmentally approved "market fix." If government thinkers were any good at picking the Next Big Thing, they'd be out there making money doing just that. The simple fact is, they're terrible at it. Even worse, their selections have the weight of government behind them, so they don't face any market repercussions for making colossal screwups. We the people have to bear the burdens of their mistakes instead -- not just overtly, but also in ways unseen and in paths not taken, having been blocked by government.

Look what has happened in the few short years since Congress passed and President Bush signed the Energy Policy Act of 2005 with its "renewable fuel" requirements. The insulated thinkers in Foggy Bottom reached amid all this market uncertainty and hand-selected the energy alternatives to save America and the planet. And what they've accomplished is already as thorough a cock-up as possible even from that rarefied assemblage of bumblers.

Is their solution better for the environment per the standards of manmade-global-warming orthodoxy? No. The most recent studies have shown that, taking into account all the factors involved in producing biofuels, including the need for shipping and for converting land to cropland, they would increase greenhouse gas emissions substantially over the amount contributed by conventional fuels.

What of oil prices? They are still on the increase. Their rise is being eclipsed, however, by the staggering increase in the worldwide price of food. What does the price of food have to do with energy policy? Because our savants' energy is made from food, especially corn, one of the primary staples worldwide.

Corn prices are at all-time highs, having passed $6 a bushel this month after hovering mostly between $2 to $3 the last ten years. This sizeable increase is affecting all kinds of markets worldwide; increasing the prices not only of consumer items and cereals made from corn, but also of beef, chicken and dairy products (livestock that is corn fed), and substitute goods such as grains.

These rapidly increasing prices are affecting not just consumers; they are shutting down businesses and putting people out of work. Last month, for example, 830 people in Siler City, North Carolina, were put out of work when Pilgrim's Pride Corp. closed a chicken-processing plant there because of "soaring feed-ingredient costs resulting from corn-based ethanol production."

In short order, the ethanol solution has brought the phrase "food riot" to the fore, as reporters seek a way to describe events in Burkina Faso, Cameroon, Egypt, Ethiopia, Haiti, Indonesia, Ivory Coast, Madagascar, Mauritania, Pakistan, the Philippines, and Thailand, among others.

Well, at least we won't be subject to a cartel making record profits and keeping supply down, will we? Not so hasty. Corn prices are, as mentioned above, at record high prices. Meanwhile, the U.S. Department of Agriculture is projecting that farmers will plant eight percent fewer acres of corn this year than last.

Record profits, record high prices, suppressed supply, consumers facing higher bills – and you thought oil was bad? This new behemoth is worse for the environment and worse for the poor -- rising food prices hit the poor the hardest, and even "liberals" know that; it's why they often try to exempt food from sales-tax increases.

Only a central-government policy "fix" could be this counterproductive. Everything else is subject to being laughed off by investors, consumers, and people whose fortunes depend upon finding ways to please investors and consumers. Officials insulated from this necessary corrective and equipped with the coercive power of government are doubly able to foist great boondoggles not only on their country, but sometimes even the world.

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About The Author
Jon Sanders is a policy analyst and research editor at the John Locke Foundation in Raleigh, N.C.

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Directive 1 - Lowering the cost of fuel
Ethanols performance loss means your total fuel expenditures will not change if you fill up with ethanol as opposed to gasoline. The gov't subsidies mean you pay for ethanol when you pay your taxes. As discussed, ethanol is raising prices on corn, grain, meat, and dairy, so you are also paying for it at the grocery store. I would also add that competition for crop space has resulted in increases to every food category because smart farmers will grow corn for ethanol instead of sweet peas, unless someone pays them a premium.

As was explained to me at a food show: Europe and Australia's wheat harvests tanked, so wheat prices are going through the roof. Wheat and ethanol-grade corn are cheap and easy to grow, and their prices are through the roof right now. Hell, the farmers can plant the seed and take a vacation. The only way we can convince them to plant peas, or carrots, or green beans is by paying them more money.

The real solution to gas prices is increasing refinery capacity, standardizing fuel mixtures between states wherever possible, and drilling offshore and in ANWAR.

I said it long ago
Just apply common sense to this sentence: "Burn the food."

Energy policy by the few...
Why did the gov't open the box on pandering to the vocal minority? It seems our energy policy is directed by the very rich energy companies and the enviromentalist gang. We have plenty of oil available right here in the good 'ol USA, yet new refineries are basically outlawed. We need a few permits for modern refineries before this whole environment-new energy push brings our economy to a halt and backslide.

The argument of world market supply and demand is a great big boondoggle. The happiness begins with me-save the environment cry will not get us anywhere globally, or will the tree huggers want to start invading countries to force it? I for one would like a consistent, across the board agreement from a majority of the scientific community concerning whether or not global warming is happening or just calling normal earth cycles as a battle cry to make Al Gore richer. In the meantime, how about two more refineries? (what caused the "dust bowl" a few decades ago?)

Time to Become Energy Independent
Billions of gallons of oil in North Dakota, Montana
Geological Survey calls find largest reserves outside Alaska:

http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId= 61488



Folow the money
Algore is on record as pushing for investment in green technologies he's got a vested interest in.
The greedy nincompoop is dumb as a rock and twice as stupid but sly as the garden serpent pushing his con game. And like the serpent he's been patiently waiting for his gullible victims to appear.
Bush is equally responsible by pushing the ethanol on us. Just like his Daddy with the freon, o o the sky is falling over Kennebunkport, gotta do something, I know, get rid of freon, it's causing the Ozone layer to shrink..o o..Car 54 where arrrre youuuu????
Everytime I go to the grocery store, my costs have gone up.
I guess the enviroterrierists have tons of money to pay off the politicians to do their bidding.
I remember 1973 and the empty promises by the
politicians of that era, nothing has changed except our costs have gone up and our freedoms gone down.
Dont they still pay farmers not to grow crops?
They haven't the brains to quit that boondoggle and let the market decide, and the farmers? But
then we will probably get more ethanol corn instead of food.
Proves one thing you have to be remarkably stupid and extremely greedy to be a politician these days.

Time to Become Energy Independent
Here in the great basin area, we have numerous capped oil wells now. One of the current "spagetti noodle" excuses is the lack of refinery capacity. I believe "BIG OIL" is perfectly happy exporting USA oil at these inflated prices, dabbling with government grants for alternative fuels, and basically whistling dixie all the way to the bank. With high fuel prices, as both political parties seem to embrace off the record, technologies should come through. However, the conspiracy theorist in me believes big oil will thwart any alternative fuel or device which greatly increases fuel economy from ever becoming mainstream. I don't believe they feel threatened by ethanol in the least.

I call it economic espionage from within. Large corporations across the board are willing to allow our economy, workforce, and world standing be undermined to pad their own bank accounts. Liberals tend to blame America for everything bad. Betwixt the two, we are screwed! Assume crash positions.

That's the whole plan
with the green movement isn't it? Drive up costs so people are forced to use less. Poor liberals will be the most affected but their ignorance abounds. Actually, scratch that, the gov't will just increase their free money. It'll be actual taxpayers who will bear the brunt.

I guess...
there is no point in saying, "We told you so."
They wouldn't listen anyway.
After all, when did the government ever listen to anything that wasn't getting them votes or putting money in their pockets?

Cutting Yourself In On the Game
It is common to see, in discussions like these, the accusations that "It's all the fault of the greedy Corporations." Or of "Big Oil."

Yet the folks who say these things never seem to see what should, logically, be their next step.

If the giant corporations are making obscene profits, then who is getting all that money?

Why, their owners, the stockholders!

And you can become a stockholder simply by picking up the telephone, calling your trusty neighborhood stockbroker, and springing for the $100 or so it will cost you for a couple of shares.

Then those obscene profits will flow to you!

Why don't these folks have their money where their mouth is?

Could it be that the amount which is "way too much" when is to be paid to some other investor, is "just grossly inadequate" when it is to be paid to them?

The Hedge I Have

The hedge talking about the "green" type hedges that you have to trim, but the impassioned purchase I made of some rural land back in the early 1990's. I bought some acres and a broken trailer and a pole barn not far from a lake, but rural. It was a sinkhole when I bought it; now due to ag land increasing, it looks like my retirement. True, I won't be able to afford to eat, but I'll be living high on the expensively fed hog.

Great article and good points. A good summary of government mischief in the markets.


Ethanol
The American citizens energy and food pricing woes reside in and are a product of one elected political assembly. An assembly of corrupt & greedy, and/or ignorant & power hungry, men and women; The Congress of the United States.

While there are a small number of exceptions, to my generic labeling as crooks in general, of our Representaitves and Senators, those few sane voices are lost in a sea of dirty money and raw political ambitions.

Our Founding Fathers faced precisely similar enemies at that point in History that persuaded them to hold King George minions personally responsible for their actions. That is the only recourse for Americans today; outside of armed rebellion.

If you haven't personally picked up a phone and called your elected representatives in the U.S. House and U.S. Senate - you are guilty of condoning their actions. If you haven't made your anger at their failure to LEAD the way in breaking Americas dependence on foreign oil - you are guilty of condoning their present course. Every American with a beef about these issues has to take the time to raise hell. You need to do the same at your State level of politics.

The only other course of action is the ultimate end game, that which our Founding Fathers forced on King George. We can always revert to type and go George Washington on their butts.

Seed salesman in Wal Mart
I got talking to one seed salesman in Wal Mart(The cereal aisle) and he told me that corn farmers are not going to plant as much corn this year but more stinken soybeans.I was told that they too were affected by higher fuel and fertilizer prices and soybeans are not as expensive to plant.I hope tp hell there is entire glut of ethanol on this market so that the price of it will go downnnnnnnnnnnnnn.But as Ronald Reagan said if something does not go fast enough then the idiots back in Washingon DC will subsidize this BS.We grow alot of corn here in Indiana.But I am still for drilling in ANWR,drilling offshore,getting oil from the Fort MacMurray,Canada area and buildong more refineries.SCREWWWWWWWWWWWWWWWWWWWWWW THe American Farm Bureau!!!!!!!!!!!!!!!!!!!!!!!I grew up on a farm.Some of these idiot farmers must be making out like bandits because in 2007 John Deere inroduced a line of new 70 Series combines and that for upwards of $300,000 and it least 15 new tractors including 4WDs up to 589/530hp and cost of a cool $250,000 on the 9630/9630T.Well anyway alof the combine and row crop production of all this new John Deere equipment is sold out for all of 2008.I am a conservative, like John Deere and will be buying John Deere to.I have been around JD since 1968 and hope that they do well.I still believe that we should be in ANWR,drilling offshore and building more oil refineries.That seedman told me that he sold about 44,000 bags of seed.

ditto
I was reading where we have identified 32 countries where life is so marginal that rises in food prices could destabilize their governments. When food is gone, after all, civil war will follow. The UN and world food relief agencies are also repeatedly saying that they cannot provide the food relief they did, as they can no longer purchase the same amount of food they once did.

How ironic. The amount of energy it takes to plant, harvest, and convert corn into ethanol is greater than the amount of energy the ethanol produces, yet we continue merrily down this absolutely foolish track. I'd like to blame this on the Democrats, but, unfortunately, in 2005, the presidency and both the senate and the house were controlled by the Republicans. So this isn't about Al Gore, this is about the utter stupidity of elected officials pandering to a minority in the farm belt whose votes they wanted to harvest.

gettingoldernwiser, Fred_PA_2000:
gettingoldernwiser--
"I believe "BIG OIL" is perfectly happy exporting USA oil at these inflated prices..."

Unless I'm missing something, I think it's been quite a while since the US exported any significant amounts of crude oil or refined products.

Fred_PA_2000:

Good point regarding investors...

The analogy that I always go back to is that during the housing boom, I don't recall any homeowners saying "Gee, it's just not fair that I should get $300,000 for a house that I paid $160,000 for just 10 years ago...I think I should either sell it for a "fair" profit, say $190,000, or maybe I can take the $140,000 windfall and put it into low-income housing."

No, the way it actually went was "hey, bring me more offers, I want to start a bidding war"

Profits are only evil when they go to the other guy.
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